$15 Trillion in 5 Days

Ahh. OK The term is meaningless. It doesn't matter if the dollars are actually printed out as currency or not. The effect is the same. They are all considered Federal Reserve Notes.

 

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Good answer! The FRN is the only legal US paper currency, but it isn't the only form of US dollars. If someone wants to hold their wealth in the form of US dollars, it will usually be in the form of Treasury securities. If someone wants to convert some of their US dollars to currency, it will usually be in the form of FRNs [unless the person is a coin collector, when they might ask for rolls of coins to search]. The money is the debt and the debt is the money.

 

Exactly. When they say China holds "xxx trillion" dollars, it is not FRN's. FRN's are the pennies to the US Treasuries $100 bills. Any argument starting with the belief that FRN's are the only US Dollars in the world, or even the important ones, is an argument starting on a false premise.

I don't know how "out there" that simple idea is, but its the basis of my belief on international currency discussions. If anyone does not understand this, then we will never agree.

Chris

 

What kind of $s are these then? Please explain and make sure you have some details.

 

I have stated it like 4 times now, and so has Cloud. US treasuries are the majority of US dollars in the world, I simply do not know how to explain it more clearly.

 

This is absolutely not true.

 

All I will say is if I wish to hold British pounds I would not be so stupid as to hold notes with no interest, I would be smart about it and buy British bonds and gain interest while still holding pounds. Same with US Dollar. No one who wishes to hold US dollars are stupid enough to hold FRN and give us interest free loans.

I simply do not wish to argue this basic, simple point needlessly with you. If you cannot or will not understand this very beginner point as to the nature of international currency, then sorry no sense discussing anything more advance.

Chris

 

Treasury Notes are not $s. It is a promissory note that you have purchased from the government which when redeemed you will be paid back the face value plus interest. You will be re-paid in Federal Reserve dollars. Keep in mind that countries who are oil buyers, and this includes both China & Japan, have to have hard Federal Reserve USD in order to purchase oil. They can't buy it any other way.

While you might not care to argue what you call a "basic, simple point", I highly recommend that you head back and look at this again. It's this basic misunderstanding of what constitutes the USD, these days, that leads people to draw the wrong conclusions. If it were as simple as you make it, then you should be able to describe it in a few sentences. Yet you are unable to.

The only currency circulated by the USA is the Federal Reserve Note. The US Treasury has not issued $ currency since 1971.

 

The FRN is a non-interest bearing note denominated in US dollars. The Treasury Note is an interest bearing note denominated in US dollars. This is the way the world works and how international finance takes place whether or not it fits your view. FRNs are the only legal paper currency, but not the only form of dollars.

 

No sense arguing, its clear he has never dealt with Finance in his life since he assumes companies keep billions in FRN's laying around, and does not understand even a million dollars overnight interest adds up. I have dealt with firms with only a few million dollars available for overnight investment and they NEVER keep FRN's overnight. NO ONE IN THE WORLD keeps FRN's in large quantities except people who do not trust their government, drug dealers, third world dictators, and some banks as business expenses. Every one else keeps "dollars" in interest bearing accounts until the last second they need it to buy something.

 

Let me see if I have this straight. Treasuries are US denominated debt and contribute to the overall amount of dollars in circulation, just as FRNs do, but both are proxies for the actual money? If this were not the case, why then call them notes? It would seem that neither of these mediums account for the total number of dollars in circulation since bank account balances exceed the amount of FRNs in existence to my knowledge, and bank accounts are not denominated in Treasury notes (bonds). So it would seem there are other dollars that are unaccounted for by either of these.

My question would be how to appropriately label these dollars that just float around in cyberspace without a FRN or bond representation. Are they simply 'US Dollars' without the 'note' attachment? It seems that these are still notes since they are not any different than a FRN from a functional standpoint, but if that's the case are they not FRNs? Yet if FRNs have to be paper, these are something else, but what?

 

When someone starts to refer to someone else in th 3rd person and doesn't address the points made, then it means they can't defend what they have said. Furthermore, you are heading down the logical fallacy path as I didn't say anything about companies. The discussion is around your contention that Treasury Notes constitute the largest supply of dollars out there and because of this, the Federal Reserve Note, $, isn't the major supply of dollars.

In regards to me having studied "finance". This isn't a matter of the finance industry dallying around with money, i.e. your "finance". It's a matter of sovereign governments holding the world's reserve currency. It's a commodity they have to have if they participate in buying or selling oil or participate in the world central banking system. They also buy treasury notes, which are not dollars, because the notes are considered financial assets of that government. If the day ever comes where they redeem these notes, they will be given Federal Reserve dollars.

Try to understand the difference and what I have said, rather than cast insults towards me. Again, you have said it is simple, yet you can't explain it at all. This is because you have it completely wrong, i.e. Treasury Notes = money, and it's becomes too easy to pick apart.

 

Please disregard the barrage of questions in my previous post. The following link on Wikipedia sheds enough light on the situation for my interest.

http://en.wikipedia.org/wiki/United_States_dollar#Means_of_issue

and then here there is a distinction between Treasury Bonds and Treasury Notes.

http://en.wikipedia.org/wiki/U.S._Treasury_bonds#Treasury_note

The primary distinction between them being length of time to maturity, not inherent functionality. In either case they must be purchased with dollars or some sort of currency. Creating the bonds or T-notes does not increase the money supply, but rather retroactively the money supply is increased independently in order to purchase them.

 

If the money supply was easy to calculate, there wouldn't be multiple measures for it. If you only use FRNs as your measure, it won't be possible to understand. In the near future, all transactions might be electronic with no currency in circulation at all. But this does not mean there is no US dollar or there is no money. It's just in a different form.

 

My question revolves around how to label the electronic currency. It functions the same as an FRN aside from the physical aspect, yet it is not an FRN in name even though it is a note of the Federal Reserve nonetheless. My guess is that it's just called a dollar =) but that doesn't imply that it's electronic in nature.

 

I agree that it is just called a dollar. Even if you open a Treasury Direct account and buy bonds, you don't buy with FRNs and they don't send you a paper bond anymore. It's all electronic, but they are all dollars. I guess nobody cares enough about the form to give electronic money a separate name.

 

As long as the USD currency can be freely withdrawn as printed Federal Reserve Notes, then the currency is considered Federal Reserve Notes. It doesn't matter if it is printed or virtual on a disk drive.

The point is the $ is issued by the Federal Reserve, not the US Treasury. When the FR orders $ notes from the Treasury, it is simply using them as a vendor (via the Bureau of Engraving) as the production vendor for the printed currency. The printed currency is not "monetized" until it reaches the Federal Reserve and they release it onto one of their accounts. For the most part, printed currency is send down to the regional Federal Reserves to be disbursed to local banks for retail and small business operations. Old currency essentially follows the reverse path.

 

This is not a measurement. The current USD is the Federal Reserve Note. The US Treasury stopped issuing USD in 1971. If any previous form of the currency, silver & gold certificates, US Bank Dollars, are deposited into the banking system, you will be credited at face value on the note and the deposit will be considered to be Federal Reserve $s. The currency you deposited will be destroyed. Of course it would be foolish to do this because those old notes have a far higher numismatic value these days.

 

On the other hand, the Fed has to purchase dollar coins for a dollar. So they are monetized when released by the Treasury, not by the Fed. So this proves there is more than one kind of dollar.

 

This isn't true either. Coins are produced by the US Mint and shipped to the Federal Reserve. The Mint is a production vendor only and they are only paid for production costs. Only when the Federal Reserve releases said coins, do they obtain a monetary value.